Blockchain’s Potential in the Federal Government


Blockchain technology is typically associated with cryptocurrencies such as Bitcoin, Ethereum, Ripple, and the scores of others that became popular late last year. However, many of the world’s biggest companies such as Walmart, British Airways, and FedEx have also adopted blockchain technology to track, manage, and secure their data.

Now, governments around the world are also experimenting with blockchain. Canada, the UK, China, India—according to Deloitte, more than a dozen countries have begun blockchain tests in curiosity of its benefit to procurement and internal use. Of course, the United States federal government has also taken such an interest in blockchain.

In March of this year, Congress said “government agencies at all levels should consider and examine new uses for this technology.” Considering the benefits of blockchain, the federal government could find substantial cost savings by replacing old systems with blockchain ones; for example, a case can be made in regards to the Department of Defense’s systems.

The Department of Defense currently uses a five-decade-old Windows server to track the status of critical Army equipment, and with more data to track than ever before, the system will only continue to become more outdated. In fact, the Pentagon recently announced it had failed to document $100 million in computer system funds and $8 million in construction projects. Similarly, the Department of the Treasury uses a five-decade-old programming language to track taxpayer data. Numerous other government systems appear to be outdated as well.

However, a transition to blockchain technology could transform federal record management. A simple explanation of blockchain is that it is a public digital ledger, a giant spreadsheet that is live across a network of thousands of computers. Anyone on the network can see the changes being made on the spreadsheet, but any changes must be verified by all computers before they are recorded permanently onto the spreadsheet.

Because each computer in the network has a copy of this spreadsheet, blockchain is veritably secure; hackers would have to gain access to the entire network of computers in order to make changes to the blockchain. Likewise, this encrypted data is stored on this network of computers, removing the need to worry about old server maintenance.

Therefore, blockchain technology can prevent, or at least mitigate, future data breaches. According to an official in the Department of Homeland Security, “blockchain technologies have the potential to revolutionize the way we manage online identity and access the internet; this R&D project will help bring this potential closer to reality.”

Additionally, blockchain would increase transparency. If citizens and local governments shared access to secured data in a blockchain, issues such as property disputes or fraudulent behavior could be minimized.

Of course, blockchain can also create cost savings and increase efficiency. On top of using blockchain to help reconcile the trillions of dollars of unreconciled funds in the federal budget, according to GSA, a blockchain solution could lower proposal analysis from forty days to ten days.